Error parsing XSLT file: \xslt\FacebookOpenGraph.xslt Is petrol making a comeback as a viable fuel choice?
Cookies on Businesscar

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive all cookies on the Business Car website. However, if you would like to, you can change your cookies at any time

BusinessCar magazine website email Awards mobile

The start point for the best source of fleet information

Is petrol making a comeback as a viable fuel choice?

Date: 26 June 2017   |   Author: Rachel Boagey

The future of fleet lies in alternatively fuelled vehicles, or at least that's what the experts say. But with diesel fleet registrations declining by 4.3% compared to 2016, and electric vehicle registrations rising by 7.4%, it seems AFVs may no longer be just a pipe dream.

Look a bit closer at the figures, though, and the increase in fleet registrations of EVs means they still only represent 0.26% of the total fleet market. Currently, therefore, the choice for fleets still lies with internal combustion engines, and therefore petrol or diesel.

"Since last year, petrol registrations have risen by almost 18%," Jayson Whittington, chief car editor at residual value experts Glass's, tells BusinessCar. Whilst it is not possible to quantify if all of this growth has been achieved through sales to fleet operators rather than the tactical registration of traditional retail cars, "what is clear is that there is a modest resurgence of interest in petrol models, that could lead towards the emergence of a comeback," says Whittington.

This rise in petrol appears to be good news when considering the harm that diesel engines are having on the environment. 97% of all modern diesel cars emit more toxic nitrogen oxide (NOx) pollution on the road than the official limit, according to a recent emissions index called EQUA Index, with a quarter producing at least six times more than the limit.
But are petrol cars any better?

While diesel cars present a large NOx problem, if everyone stopped driving diesels tomorrow, the fact is we would have a CO2 problem instead because petrol engines emit 15% more carbon dioxide on average per kilometre than their diesel equivalents and typically aren't as economical over long distances either.

Differing needs

"There are pros and cons of choosing to operate petrol and diesel and they largely depend on the individuals who will be driving the cars," explains Whittington. "There are already many low-mileage users who predominantly drive 'around town' who could drive petrol models instead of diesel without a major impact on fuel usage, which may well have saved fleets on the initial cost of purchase or on monthly rental payments."

This could be why the diesel share of new car registrations  for members of the British Vehicle Rental and Leasing Association has fallen from around 75% in the first quarter of 2015 to around 67% now, while petrol has risen from 21% to 27% over the same period.

When given the choice, however, many end users will still favour diesel due to the additional fuel economy, however small, which results in lower private mileage costs. Conversely, there will also be petrol users covering high mileages that would benefit from the fuel economy that diesel offers.  

Whittington explains: "Whilst the CO2 is often higher than the diesel alternative, there is a 3% benefit-in-kind uplift for diesel and the initial purchase price tends to be greater, so the overall cost to the employee in additional taxation can be reasonably close. "Ultimately, the decision to choose petrol over diesel should be based on the needs of the business and of the employee and should not be driven by popular opinion. After all, it should be remembered that the latest diesel technology is cleaner than ever."

Petrol innovations

The BVRLA's director of external relations, Toby Poston, explains that diesel became the dominant fuel type for company cars as a result of its great fuel efficiency, performance and low cost of ownership under the Government's CO2 emissions-based tax regime. But this dominance has been on the wane for some time as the diesel share of fleet registrations is eroded by modern turbo-charged petrol-engined cars that have become better at delivering similar benefits.

Manufacturers have been innovating in the space of petrol powertrain technology, resulting in many company car buyers now considering downsized petrol engines - many emitting around 100g/km CO2 - as a viable, efficient alternative to diesel, explains Poston.

Ford's 1.0-litre EcoBoost engine, launched in the Focus in 2012, uses technologies including high-pressure direct fuel-injection, twin-independent variable cam timing and turbocharging to deliver optimised fuel efficiency alongside the power and performance of a naturally aspirated 1.6-litre engine.

Bob Fascetti, vice-president of global powertrain engineering at Ford, tells BusinessCar that one in five all-new Ford vehicles sold in Europe in the last year were equipped with the 1.0-litre EcoBoost, including almost two in five Fiestas. "Ford has pushed back the boundaries of powertrain engineering to further improve the acclaimed 1.0-litre EcoBoost engine, and prove that there is still untapped potential for even the best internal combustion engines to deliver better fuel efficiency for customers."

Ford now plans to launch variable displacement for the engine using cylinder deactivation technology from early 2018, to be seen in the new Fiesta ST. Fascetti says: "This technology will be a global first on a three-cylinder engine; it can stop or restart combustion in 14 milliseconds and improve CO2 and fuel efficiency by up to 6%."

Peugeot is another manufacturer which has been innovating its petrol engines, offering an advanced three-cylinder petrol engine technology that it claims offers drive and performance normally associated with much bigger engines but with significantly improved fuel consumption and CO2 emissions.

Its 1.2 PureTech engine first launched with the 208 and turbo-charged versions of the 308 last year combines reduced-weight materials with direct fuel-injection into three cylinders. It reduces CO2 emissions by 18% compared to current four-cylinder engines but also claims to provide driving pleasure due to generous torque at low speeds.

Despite these innovations, Poston believes that petrol engines will soon face many hurdles: "Petrol engine emissions are reducing but in the medium to long term, they are unlikely to keep pace with the tax increases introduced through the VED and company car tax regimes. The increasing focus away from mpg and CO2 towards NOx emissions will push more fleets towards electric vehicles."

The viability of EVs

It is undeniable that battery range and charging infrastructure continue to be the main objections to what arguably is the future of motoring, but Whittington explains there are also other issues to contend with for fleets surrounding EVs. While business users with low mileage would benefit from an electric vehicle, particularly from a taxation point of view, even those currently low rates are set to rise year on year as part of Government legislative changes. "EVs tend to be more expensive to buy despite the Government grant on offer, and poor residual values reflect the lack of demand in the used market, which has an adverse effect on monthly leasing rates," Whittington says.

He believes that many fleet customers think EVs are not yet viable and it may take several years to overcome the infrastructure issues that drivers currently face. "A number of manufacturers have extensive EV programmes and with the technology, range and aesthetics progressing quickly, we should expect to see volumes increasing steadily, but we are many years away from EVs rivalling petrol, diesel or even hybrid alternatives," he adds.

The BVRLA agrees that EVs are an increasingly viable option for many fleets, but draws attention to the fact that EV use in fleets is currently dominated by plug-in hybrids. Poston says: "Hybrids have always had an mpg and emissions advantage in urban environments, but they are rapidly catching up with diesel and petrol cars for motorway and highway journeys, particularly for drivers that aren't heavy-footed.

"Therefore, fleets are likely to continue to prefer hybrids as a 'compromise' powertrain until we see a significant strengthening in pure-EV range, charging infrastructure, incentives for early adopters and residual values."

Fortunately, there is progress to report in all these areas. Residual values are rising, and an increasing number of mainstream manufacturers are coming to market with new pure-EV models that have ranges of over 200 miles. Unfortunately, Poston believes the company car tax regime needs a serious rethink.

While the Government has said it will introduce a new, more granulated range of company car tax bandings from April 2020 that will provide some attractive incentives for people choosing the cleanest pure-electric and hybrid cars, Poston says: "Company car drivers make pragmatic, cost-conscious decisions and we believe that many of them will defer their move to low-emission motoring until the incentives come into effect."

At this stage there has been no indication from Government on whether there will be major taxation implications for company car users should current published data turn out to be as inaccurate as many fear.

While it is likely that conventional petrol and diesel engines will dominate the market for the next decade, as the industry moves towards Worldwide Harmonized Light Vehicles Test Procedure (WLTP) 'real-world testing' which will re-examine vehicle emission and fuel consumption data in more realistic scenarios, it is likely that the landscape as we see it today may change significantly for both petrol and diesel.